Which of the following are qualitative characteristics of accounting information according to the FASB's conceptual framework?

• A. Comparability and profitability
• B. Timeliness and solvency
• C. Materiality and liquidity
• D. Relevance and faithful representation

Answer: (D)

Verified step by step guidance

1. Understand the context: The FASB's conceptual framework outlines the qualitative characteristics that make accounting information useful for decision-making. These characteristics are divided into fundamental and enhancing qualities.
2. Identify the fundamental qualitative characteristics: According to the FASB, the two fundamental qualitative characteristics are relevance and faithful representation. Relevance ensures the information is capable of influencing decisions, while faithful representation ensures the information accurately reflects the economic phenomena it represents.
3. Differentiate between fundamental and enhancing characteristics: Enhancing characteristics, such as comparability, timeliness, and understandability, improve the usefulness of information but are secondary to the fundamental characteristics.
4. Analyze the options provided: Comparability, profitability, timeliness, solvency, materiality, and liquidity are not fundamental characteristics according to the FASB framework. Relevance and faithful representation are the correct fundamental characteristics.
5. Conclude the reasoning: Based on the FASB's conceptual framework, the correct answer is relevance and faithful representation, as these are the fundamental qualitative characteristics of accounting information.